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Archive for the ‘Compensation’ tag

Fog of news, Caterpillar-style

Paul Gordon of the Peoria Journal Star pokes some holes in the notion that workers in the new Caterpillar engine plant in Seguin, Texas, will make $21 an hour, a number some local real estate type appears to have pulled out of thin air.

I researched the typical base wages for factory workers in Texas, the San Antonio area in particular.

According to the U.S. Department of Labor, Bureau of Labor Statistics, the only production workers now making $21 an hour, or $44,000 a year, are supervisors – the bosses of those doing the assembly work.

Engine assemblers – which I expect many of these jobs would be – make an average of $16 an hour there, or about $33,270 a year. The BLS says there are currently only 540 engine assemblers in the San Antonio metropolitan area. Other assemblers make less.

Machinists – which likely will be among the jobs to be created at Seguin – make an average of $14.41 an hour, or just under $30,000 a year.

The average pay for all production workers in that area, the BLS says, is $12.79 an hour.

Cat flacks won’t say what they plan to pay. Gordon notes there’s at least a shred of likelihood that Cat is doing in private what it says in public: consolidating production in a single location mainly to improve efficiency.

For fun we should set up a pool to see who can guess how long it’ll take the folks responding to Paul’s post to blame everything on greedy corporate bean-counters or grasping union leaders.

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Tom Mangan posted at 12:24 am December 28th, 2008 |

About that Caterpillar pay cut

Looks like CEO Jim Owens won’t be crying any tears: On Dec. 10 he exercised his options on 100,000 shares with a strike price of $31 a share. He disposed of about 82,000 shares with a profit of $12.75 per, according to my math, turning a cool $1.04 million on the transaction, but the SEC filing says he acquired another 18,000 shares that weren’t sold, which would’ve set him back over a half-million (though without seeing his employment contract it’d be impossible to know how that shakes out; I never knew execs used options to actually invest in their own stock; I figured it was just free money).

One juicy tidbit: Owens cashed his options six months before expiration; generally the strategy is to hold as long as humanly possible and exercise at expiration. Makes you wonder what Owens knew that the rest of us didn’t, but that’s always the case with insider sales.

Something else to think about in regards to exec compensation next year: As long as I can remember, Cat traded between the 30s and the 70s. With the stock huddling around 40, I suspect vast oceans of options are underwater, potentially forcing many bigwigs to rely on mere salaries (which are not small, but everybody lives up to their paycheck; some are going to be living down next year.)

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Tom Mangan posted at 11:49 pm December 22nd, 2008 |

Cat to cut executive pay, offer buyouts

This should warm the hearts of UAW leaders everywhere: Caterpillar’s taking a whack at management pay this time, according to Dow Jones NewsWires:

Caterpillar Inc. (CAT) will slash executive compensation by as much as 50% next year, with lower cuts for other employees, as the manufacturing giant becomes the latest to cut salaries to cope with slumping demand.

In addition, most U.S.-based employees will be eligible for buyouts as Caterpillar announced a hiring freeze and continues to look for other cost-saving opportunities, including layoffs.

Oh, and there’s this:

The company has benefited from a five-year boom led by emerging markets in big need for the heavy construction equipment made by Caterpillar. During that time, the work force rose nearly 50% to 101,000 as revenue more than doubled.

Let’s hope most of those folks keep their jobs, but the fact a bust almost always over-corrects the excesses of the boom is worrisome.

A post at MarketWatch on the same news item has some interesting comments about what to do about excessive executive pay.

As long as we’re talking jobs, the New York Times reports that lots of companies are avoiding layoffs by cutting hours and other tactics that fall short of outright layoffs:

Some of these cooperative cost-cutting tactics are not entirely unique to this downturn. But the reasons behind the steps — and the rationale for the sharp growth in their popularity in just the last month — reflect the peculiarities of this recession, its sudden deepening and the changing dynamics of the global economy.

Companies taking nips and tucks to their work force say this economy plunged so quickly in October that they do not want to prune too much should it just as suddenly roar back. They also say they have been so careful about hiring and spending in recent years — particularly in the last 12 months when nearly everyone sensed the country was in a recession — that highly productive workers, not slackers, remain on the payroll.

The worry for most companies is what to do when the fat is gone and they have to start cutting into the muscle. Anybody who survived the bloodbath of the early ’80s remembers what that was like.

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Tom Mangan posted at 8:01 am December 22nd, 2008 |